Ashford W. Meikle, Business Reporter

Stephen Gooden, general manager of PCAM

Pan Caribbean Asset Manage-ment (PCAM), the unit trust arm of financial conglomerate, Pan Carib-bean Financial Services (PCFS), has snapped up some 20 million shares of Mayberry Investments Limited (MIL) for its Sigma Optima unit trust.

With the purchase of the Mayberry shares from Capital and Credit Securities, the brokerage arm of the Capital and Credit Financial Group (CCFG), Pan Caribbean is the now the number three shareholder in the brokerage and financial services company.

Capital and Credit has now totally offloaded its 21.5 million stock-holdings in Mayberry.

"The market is very dynamic and at the end of the day what you are looking for are the things that will give you the best earning potential going forward so from time to time time you will rebalance your portfolio, moving it from one asset class to the next," general manager of Capital and Credit Securities, Devon Barrett, explaining the sale to PanCaribbean.

PCAM paid $2 per share, making the transaction an approximate $40 million deal.

The acquisition pumped volume trades in the Mayberry stock last Thursday to 27,448,981 shares, pushing up the share price then by 12 cents to $2.12.

PanCaribbean's stockholding is still minor compared to the top two shareholders, brothers Christopher and Konrad Berry, who hold about 428 million shares each.

Yesterday PCAM general manager Steven Gooden confirmed the purchase, saying it was an investment decision made on the relative valuation of the stock.

"The opportunity presented itself É we saw an opportunity to acquire the 20 million shares and it is rare that you find financial companies trading at a discount to book value," said Gooden.

"Typically those companies trade at closer to one and a half to two times book value É while Mayberry is about 0.95."

A senior investment manager who requested anonymity, told Wednesday Business that PanCaribbean has been very active in the market recently.

"They have been buying huge chunks of Life of Jamaica, Berger Paints and Pan Jamaican Investments," said the executive.

In fact, market analysts on the weekend indicated that several investors were now hunting bargains, with expectations that the market will soon regain some of its lost vibrancy.

PanCaribbean's market forays coincide with Gooden's employment at the firm some six weeks ago, but he brushed the observation aside as 'just a coincidence'.

"The Sigma Optima is a $3.5 billion fund and, in positioning the portfolio, we do large transactions form time to time. É We have some large clients and they have been doing some repositioning," said Gooden.

The PCAM executive said that the "equities market has bottomed out" and he expected Mayberry's performance to improve with the expected rebound.

The stock traded at $2 on Monday.

"Looking at its price to book, looking at Mayberry's balance sheet which is heavily weighted in equities É I expect some recovery going forward and that should improve Mayberry's financials going forward," said Gooden.

A stockbroker with whom Wednesday Business spoke, agreed with Gooden.

"From my point of view, Mayberry's book value is understated," said the broker who declined to be identified. "The company is a very good long-term buy since it is trading below its book value and from what I can see from its balance sheet there is a lot of potential value in the company. A big portion of it has some attractive stocks which are trading below their book value."

Some of these stocks include, Lascelles, National Commercial Bank and Red Stripe which, he said, have good long-term potential.

"In a sense it's like you are buying into a fund," said the stockbroker.

"As soon as equities appreciate, the earnings of Mayberry will increase and I think it is from that perspective that Sigma looked."

Gooden is expected to shape the direction of PCAM and drive the growth of its three unit trusts which have recorded mixed fortunes, principally because of the 26 per cent year to date plunge in the Jamaican Stock Exchange.

The Sigma Optima unit trust, for example, has experienced a 20 per cent decline in its year to date growth rate.

"We have done some repositioning and we are confident that the current portfolio composition will reward unit holders favourably going forward," he said.

But, while the purchase of the stocks might be a boon to PanCaribbean, it represents a 22 per cent loss for Capital and Credit Securities which, last year, spent just under $200 million to acquire some 45.6 million of MIL's shares in the latter's private placement offer.

As one of the two selling dealers, CCSL had to clawback 50 per cent of its private placement allotment, or some 22.8 million shares, into the public pool for Mayberry's IPO.

At the IPO selling price of $5.05, CCSL would have netted just over $115 million, or a 15 per cent gain on the shares that were in the public pool.

However, Barrett, while admitting the loss, said "this was already accounted for in prior quarters."

- ashford.meikle@gleanerjm.com